AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 5, 1995
REGISTRATION NO. 33-55081
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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PRE-EFFECTIVE
AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ALEXANDER & ALEXANDER SERVICES INC.
(Exact name of registrant as specified in its charter)
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MARYLAND 52-0969822
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1185 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 840-8500
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
ALBERT A. SKWIERTZ, JR., ESQ.
VICE PRESIDENT & GENERAL COUNSEL
ALEXANDER & ALEXANDER SERVICES INC.
1185 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10036
(212) 444-4532
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. X
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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(SUBJECT TO COMPLETION) ISSUED APRIL 5, 1995
PROSPECTUS
ALEXANDER & ALEXANDER SERVICES INC.
1,136,900 SHARES OF COMMON STOCK, $1.00 PAR VALUE
This Prospectus relates to the offering of up to an aggregate of 1,136,900
shares (the "Shares") of Common Stock, $1.00 par value per share (the "Common
Stock"), of Alexander & Alexander Services Inc. (the "Company") by certain
stockholders named herein (the "Selling Stockholders"). See "Selling
Stockholders." The Company will not receive any proceeds from the sale of the
Shares. The Company has agreed to indemnify the Selling Stockholders for certain
liabilities, including civil liabilities under the Securities Act of 1933, as
amended (the "Securities Act"), in certain circumstances. See "Plan of
Distribution." FOR A DISCUSSION OF CERTAIN RISKS ASSOCIATED WITH THE PURCHASE OF
THE SHARES, SEE "RISK FACTORS."
The Selling Stockholders acquired the Shares from the Company in a
transaction related to the Company's acquisition of all the interests in the
assets and the business of Clay & Partners, a U.K. partnership. Except for the
fees and disbursements of counsel and other advisors to the Selling
Stockholders, any underwriters' fees and expenses and underwriting discounts and
commissions and transfer taxes in respect of the Shares being sold, which will
be borne by the Selling Stockholders, the Company has agreed to pay all other
expenses related to this registration.
The Selling Stockholders, directly or through agents or through
broker-dealers or underwriters from time to time designated, may effect sales of
Shares from time to time on the New York Stock Exchange or The International
Stock Exchange of the United Kingdom and The Republic of Ireland, Ltd. (the
"Exchanges") or otherwise pursuant to and in accordance with the applicable
rules of the Exchanges, in block transactions, in negotiated transactions, in an
underwritten public offering or in a combination of any such methods of sale, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. To the extent required, the
number of Shares to be sold, purchase price, public offering price, the name of
any such agent or broker-dealer and any applicable commission or discount with
respect to a particular offering will be set forth in an accompanying Prospectus
Supplement. The aggregate proceeds to the Selling Stockholders from the sale of
the Shares so offered will be the purchase price of the Shares sold less the
aggregate agents' commissions and underwriters' discounts, if any, and other
expenses of issuance and distribution not borne by the Company. See "Plan of
Distribution."
On April 4, 1995, the last reported sale price of the Company's Common Stock
on the NYSE was $23.625.
The Selling Stockholders and any broker-dealers, agents or underwriters that
participate in the distribution of any of the Shares may be deemed to be
"underwriters" within the meaning of the Securities Act and any commission
received by them and any profit on the Shares purchased by them may be deemed to
be underwriting commissions or discounts under the Securities Act. See "Plan of
Distribution."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS APRIL , 1995
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
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No person has been authorized to give any information or to make any
representation other than those contained or incorporated by reference in this
Prospectus in connection with the offer contained herein and, if given or made,
such other information or representation must not be relied upon as having been
authorized by the Company or by any other person. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that there has been no change in the information about the
Company since the date hereof, or that the information herein is correct as of
any time subsequent to their respective dates. This Prospectus shall not
constitute an offer to sell, or the solicitation of an offer to buy, any
security other than the Shares, nor shall this Prospectus constitute an offer or
solicitation by anyone in any jurisdiction in which such offer or solicitation
is not authorized, or in which the person making such offer or solicitation is
not qualified to do so, or to any person to whom it is unlawful to make such
offer or solicitation.
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy
statements, and other information filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as the following
regional offices of the Commission: New York Regional Office, Seven World Trade
Center, 13th Floor, New York, New York 10048 and the Chicago Regional Office,
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. Copies of such material can also be obtained by mail from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 upon payment of the fees prescribed by the Commission.
Reports, proxy statements and other information concerning the Company can also
be inspected at the offices of the New York Stock Exchange at 20 Broad Street,
New York, New York 10005.
The Company has also filed with the Commission a Registration Statement
(together with all amendments and exhibits thereto, the "Registration
Statement") under the Securities Act. This Prospectus does not contain all of
the information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission. For
further information, reference is made to the Registration Statement, copies of
which may be obtained from the Public Reference Section of the Commission, 450
Fifth Street, N.W., Washington, D.C. 20549 upon payment of the fees prescribed
by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-8282) are hereby incorporated by reference in this Prospectus:
(1) Annual Report on Form 10-K for the year ended December 31, 1994,
except as to Items 3, 7 and 8;
(2) Annual Report on Form 10-K/A, Amendment No. 1, for the year ended
December 31, 1994 as to Items 3, 7 and 8 ("Form 10-K/A");
(3) Current Report on Form 8-K, dated March 15, 1995;
(4) Current Report on Form 8-K, dated March 28, 1995;
(5) The description of the Common Stock contained in the Company's
Registration Statement on Form 8-A, including any subsequent
amendments or reports filed for the purpose of updating such
description; and
(6) The description of the Company's preferred share purchase rights
contained in the Company's Registration Statement on Form 8-A,
including any subsequent amendments or reports filed for the purpose
of updating such description.
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All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the Shares covered by this
Prospectus shall be deemed to be incorporated herein by reference into this
Prospectus and to be a part hereof from their respective dates of filing. Any
statement contained in this Prospectus or in a document incorporated or deemed
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in this
Prospectus or in any other subsequently filed document which is or is deemed to
be incorporated herein by reference modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon written or oral request of such person, a copy of
any and all of the documents that have been incorporated by reference (other
than any exhibits thereto). Requests for such documents should be directed to
Alexander & Alexander Services Inc. at 10461 Mill Run Circle, Owings Mills,
Maryland 21117, Attention: Alice L. Russell, Corporate Secretary.
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RISK FACTORS
Prospective purchasers should consider carefully all information set forth
or incorporated in this Prospectus in deciding whether to purchase the Shares,
and, in particular, should consider the following:
REPOSITIONING AND REVENUE GROWTH. The year 1994 marked major and significant
changes for the Company as a restructuring process was undertaken by the
Company's new senior management and substantially completed. In addition, the
Company reduced its financial exposures to various longstanding litigation and
other contingencies and sold various non-core businesses. While the Company has
made substantial progress during 1994 in stabilizing its operations, rebuilding
its balance sheet, and improving its cost structure, the Company must now focus
on the implementation of its cost reductions, increasing revenue growth, and
improving its market share and services. The Company's restructuring and related
initiatives in part reflect management's view that insurance premium pricing
will not improve significantly in the foreseeable future and only moderate
revenue growth is anticipated in human resource management consulting. Revenue
growth will depend increasingly on the development of new products and services
and new business generation. While much progress has been made to date, there is
no assurance that the Company can achieve its objectives and return the Company
to profitability in 1995 and thereafter. In addition, during this transition
period the Company's ability to retain and attract qualified employees may be
adversely affected. During 1995, the Company will also explore geographical
market expansion and further industry specialization as well as consider
possible niche and substantial strategic acquisitions. As part of its evaluation
of opportunities, the Company engages with interested parties in discussions
concerning possible transactions. The Company has evaluated and is evaluating
such opportunities and prospects and will continue to do so throughout 1995. The
Company cannot predict if any transaction will be consummated, nor the terms or
form of consideration required, nor, if consummated, what the financial benefit,
if any, will be to the Company. For further information concerning these matters
see the "Recent Developments" section of this Prospectus and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
("MD&A") included in Form 10-K/A.
IMPACT OF PRICING ON THE COMPANY'S MARGINS AND REVENUES. The Company's
insurance broking revenues are generally affected by premium rates charged by
insurance companies in the property and casualty markets and the overall
available market capacity. Since the mid-to-late 1980's, commission and fee
growth has been constrained due to soft pricing and excess capacity and the
resultant intense competition among insurance carriers and brokers for market
share. Lower interest rates have reduced investment income earned on fiduciary
funds, but are expected to increase moderately in the U.S. and U.K. Revenue
growth from the Company's human resource management consulting operations was
impacted by uncertainty over health care reform in the U.S. Many clients
postponed or reduced planned employee benefit reviews while waiting to analyze
the impact of the potential governmental health care proposals. The Company
anticipates moderate revenue growth in 1995 as corporations recognize that any
such proposals are not likely to affect their effort to redesign and streamline
employee benefit packages. The Company's restructuring and related initiatives
in part reflect management's view that insurance premium pricing will not
improve significantly in the foreseeable future. Revenue growth will depend
increasingly on the development of new products and services and new business
generation. For further information see the "Recent Developments" section of
this Prospectus and MD&A included in Form 10-K/A.
LIMITATIONS ON PAYMENT OF DIVIDENDS. Dividends on the Series B Convertible
Preferred Stock, $1.00 par value (the "Series B Convertible Preferred Shares"),
will reduce the amount of earnings otherwise available for distribution to
holders of the Common Stock by approximately $16 million in the first year after
issuance, and by approximately $23 million by the fifth year after issuance,
assuming dividends on the Series B Convertible Preferred Shares were to be paid
in kind over this period. The holders of the Series B Convertible Preferred
Shares also have the right to require the Company to repurchase their shares at
specified premium prices if a "Special Event" occurs. This right may tend to
deter the Company from engaging in a Special Event, which includes, for example,
the declaration or
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payment of dividends aggregating in excess of (x) cumulatively 25% of earnings
in 1995 and 1996, and (y) cumulatively 50% of earnings thereafter; the
disposition by the Company of assets representing 35% or more of the Company's
book value or gross revenues; and certain mergers of the Company or any of its
principal subsidiaries with or into any other firm or entity involving more than
20% of the total market value of the Company's equity securities. Other Special
Events include the acquisition by a third party, with the consent or approval of
the Company, of beneficial ownership of securities representing 35% or more of
the Company's total outstanding voting power. In addition, no dividends may be
declared or paid on the Company's Common Stock, $1.00 par value ("Common
Stock"), unless an equivalent amount per share is declared and paid on the
dividend paying shares associated with the Company's Common Stock equivalents.
The Board of Directors will continue to take into consideration the Company's
financial performance and projections, as well as the provisions of the AIG
Agreement pertaining to declaration of dividends on Common Stock. These factors,
together with cash flow, operating results, possible changes in near- and
long-term corporate strategies resulting from management changes, as well as
general market and economic conditions, could affect future decisions of the
Board of Directors with respect to the size and timing of dividends and other
distributions on the Company's Common Stock, as well as other matters generally
affecting the rights of holders of the Common Stock. At December 31, 1994, the
current maximum amount of unrestricted funds the Company had available to pay
Common Stock dividends under Maryland law equaled approximately $202.5 million.
For further information concerning this matter, see MD&A and Note 10 to the
Notes to the Financial Statements included in Form 10-K/A.
CONTINGENT LIABILITIES AND LEGAL PROCEEDINGS. The Company and its
subsidiaries are subject to various claims and lawsuits from both private and
governmental parties, which includes claims and lawsuits in the ordinary course
of business, consisting principally of alleged errors and omissions in
connection with the placement of insurance and in rendering consulting services.
In some of these cases, the remedies that may be sought or damages claimed are
substantial. Additionally, the Company and its subsidiaries are subject to the
risk of losses resulting from the potential uncollectibility of insurance and
reinsurance balances, claims advances made on behalf of clients, exceeding
policy limits, and indemnifications connected with the sales of certain
businesses. The Company's contingent liabilities involve significant amounts.
While it is not possible to predict with certainty the outcome of such
contingent liabilities, the applicability of coverage for such matters under the
Company's professional indemnity insurance program or the financial impact of
such contingent liabilities on the Company, management presently believes that
such impact will not be material to the Company's financial condition. However,
it is possible that future developments with respect to these matters could have
a material effect on future interim or annual results of operations. For further
information concerning these matters, see the "Recent Developments" section of
this Prospectus and Notes 6 and 14 to the Notes to Financial Statements included
in Form 10-K/A.
SHAND CONTINGENCIES. In January and March 1995, the Company negotiated the
settlement of certain indemnification obligations relating to the 1987 sale of
Shand Morahan & Company, Inc. ("Shand"), the Company's U.S. underwriting
subsidiary. The March 1995 settlement is subject to court approval of which no
guarantee can be given. Notwithstanding the January 1995 settlement and the
March 1995 settlement, if approved, the limitation of certain contract
obligations and the restructuring of the parties' relationship, some of the
Company's indemnification provisions under the 1987 agreement are still in
effect. As a result, there remains the possibility of substantial exposure under
the indemnification provisions of the 1987 agreement. For further information
concerning this matter, see Note 14 to Notes to Financial Statements included in
Form 10-K/A.
DISCONTINUED OPERATIONS. Claims relating to the Company's discontinued
operations are expected to develop and be settled over the next twenty to thirty
years. Liabilities stemming from these claims cannot be estimated using
conventional actuarial reserving techniques because the available historical
experience is not adequate to support the use of such techniques and because
case law, as well as scientific standards for measuring the adequacy of site
cleanup (both of which have had, and will
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continue to have, a significant bearing on the ultimate extent of the
liabilities) is still evolving. The Company has certain protection against
adverse developments of the insurance liabilities through two finite risk
contracts issued by a reinsurance company. These liabilities represent the
Company's best estimates of the probable liabilities based on independent
actuarial estimates. The Company believes that, based on current estimates, the
established total net liabilities of discontinued operations are sufficient to
cover its exposures. However, there is no assurance that further adverse
development may not occur due to variables inherent in the estimation processes
and other matters described above. For further information concerning this
matter, see MD&A and Note 6 to the Notes to Financial Statements included in
Form 10-K/A, and the "Recent Developments" section included in this Prospectus.
FOREIGN CURRENCY TRANSLATION, DERIVATIVE PRODUCTS AND OTHER RISKS. Changes
in foreign currency exchange rates and interest rates could significantly impact
the Company's interim and annual net consolidated operating income. To reduce
the risk of currency exchange fluctuations, the Company utilizes derivative
products. The Company enters into foreign exchange contracts primarily to cover
exposures that arise at its London-based specialty and reinsurance broking
operations. These exposures arise because a significant portion of the revenues
of these operations are denominated in U.S. dollars, while their expenses are
primarily denominated in U.K. pounds sterling. To hedge this exposure, the
Company generally sells U.S. dollars and purchases U.K. pounds sterling. The
Company also utilizes foreign exchange options to supplement this activity. The
Company has also entered into interest rate swaps and forward rate agreements as
a means to limit the earnings volatility associated with changes in short-term
interest rates on its existing and anticipated fiduciary investments with
maturities of three months or less. These instruments are contractual agreements
between the Company and financial institutions which exchange fixed and floating
interest rate payments periodically over the life of the agreements without
exchanges of the underlying principal amounts. In addition to interest rate
swaps and forward rate agreements as part of its interest rate management
program, the Company utilizes various types of interest rate options, including
caps, collars, floors and interest rate guarantees. The Company does not
anticipate any material restrictions regarding the expatriation of funds from
foreign countries. As to fluctuations in interest rates, a 1 percent change in
interest rates will increase or decrease the Company's investment income by
approximately $10 million. For further information concerning this matter, see
MD&A and Note 12 to Notes to Financial Statements included in Form 10-K/A.
NOTICE OF PROPOSED 1991 TAX ADJUSTMENTS. In 1994, the Company received a
Notice of Proposed Adjustment from the IRS proposing an increase in taxable
income for the 1991 year which, if sustained, would result in an additional tax
liability estimated by the Company at $50 million. This proposed adjustment
relates to intercompany transactions involving the stock of a U.K. subsidiary.
The Company disagrees with the IRS position on this issue. Although the ultimate
outcome of the matter cannot be predicted with certainty, the Company and its
independent tax counsel, Steptoe & Johnson, believe there are meritorious
defenses to the proposed adjustment and substantial arguments to sustain the
Company's position and that the Company should prevail in the event this issue
is litigated. (Steptoe & Johnson's belief is based upon the Internal Revenue
Code, Treasury regulations, administrative rulings and other applicable
authorities as in effect on October 5, 1994, and is subject to the accuracy of
facts represented to Steptoe & Johnson concerning the 1991 transaction.) A
similar set of transactions occurred in 1993 for which the IRS could propose an
increase in taxable income which would result in an additional tax liability
estimated by the Company at $25 million. The Company's 1993 tax return is not
currently under examination. The Company believes it should prevail in the event
this similar issue is raised by the IRS. Accordingly, no provision for any
liability with respect to the 1991 and 1993 transactions has been made in the
consolidated financial statements. The Company believes that its current tax
reserves are adequate to cover all of its tax liabilities. Under the AIG
Agreement (hereinafter described), the Company has agreed to make certain
payments to AIG pursuant indemnification, limited to $10 million, to cover tax
payments and reserves in excess of recorded tax reserves as of March 31, 1994,
including the tax matters described above. For further information concerning
these matters, see MD&A and Notes 5 and 14 to the Notes to Financial Statements
included in Form 10-K/A.
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RECENT DEVELOPMENTS
The year 1994 marked major and significant changes for the Company as a
restructuring process was undertaken by the Company's new senior management and
substantially completed. In addition, the Company reduced its financial
exposures to various longstanding litigation and other contingencies and sold
various non-core businesses. These actions included the following:
NEW MANAGEMENT
- Since mid-June 1994 a new senior management team has been appointed and
ten new directors have been elected.
DIVIDEND REDUCTION
- In June 1994, the quarterly common stock dividend was reduced by 90
percent resulting in an annualized cash savings of over $39 million.
AIG INVESTMENT
- In July 1994, American International Group, Inc. ("AIG") invested $200
million in the Company and received 4 million shares of non-voting 8%
Series B Cumulative Convertible Preferred Shares. The net proceeds of
$196 million will be used for general corporate purposes.
- Under the purchase agreement with AIG (the "AIG Agreement"), the Company
agreed to make certain payments to AIG pursuant to an indemnification
given with respect to the Company's balance sheet as of March 31,1994.
Pursuant to an amendment to the AIG Agreement, dated November 10, 1994,
the Company's potential exposures under the indemnification,
individually or in the aggregate, was limited to $10 million. Pursuant
to a second amendment, dated March 16, 1995, the indemnification was
further limited to cover only tax payments and reserves in excess of
recorded tax reserves as of March 31, 1994.
EXPENSE REDUCTION AND PROCESS IMPROVEMENT
- In July 1994, the Company began a major internal review of all of its
worldwide operations to identify opportunities to reduce costs and
enhance client service.
- The 1995 savings from these reviews are estimated at approximately $100
million before normal inflationary increases. A portion of the savings
will be reinvested into new technology, product development and other
areas associated with service enhancements as well as revenue
generation.
- The Company has also undertaken a long-term reengineering process of its
U.S. risk management and insurance services operations to standardize
and automate work processes and increase productivity.
RESTRUCTURING AND OTHER CHARGES
- In the fourth quarter of 1994, management committed to a formal plan of
restructuring and in February 1995, announced a $69 million fourth
quarter 1994 restructuring charge, including $25.2 million to
consolidate real estate space requirements at 48 offices worldwide and
$43.8 million for early retirement programs and worldwide workforce
reductions of approximately 1,100 positions. In addition, a $24.9
million provision was made to settle certain litigation matters and
strengthen reserves related to the Company's professional indemnity
programs.
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NEW CREDIT AGREEMENT
- On March 27, 1995, the Company's existing credit agreement was cancelled
and replaced by a new $200 million three-year facility with various
banks which expires in March 1998. The new agreement provides for
unsecured borrowings and contains various covenants, including minimum
consolidated tangible capital funds, minimum consolidated tangible net
worth, maximum leverage and minimum cash flow coverage requirements. In
addition, the occurrence of a "Special Event" under the AIG Agreement
which is not waived would constitute an event of default under the new
agreement.
CONTINGENCY MATTERS
Shand and Mutual Fire Contingencies
- In January 1995, the Company negotiated the settlement of certain
indemnification obligations relating to the 1987 sale of Shand. The
settlement resulted in a fourth quarter 1994 pre-tax charge of $32.5
million. Under terms of the settlement, the Company will pay $14 million
in cash, issue a five-year interest bearing note in the principal amount
of $14 million and expects to pay a contingent obligation of $4.5
million.
- On March 27, 1995, the Company, Shand and the rehabilitator of Mutual
Fire, Marine and Inland Insurance Company ("Mutual Fire") entered into a
settlement agreement, which if approved by the courts, would terminate
the rehabilitator's litigation and release the Company and Shand from
any further claims by the rehabilitator. As a result, in the fourth
quarter of 1994, the Company increased its previously established
reserves of $10 million based on the estimated settlement amount, and
recorded a pre-tax charge of $37.2 million.
Discontinued Operations
- In July 1994, the Company entered into an insurance-based financing
contract (finite risk contract) with Centre Reinsurance (Bermuda)
Limited, a reinsurance company, that affords protection for certain
long-tailed exposures included in the Company's discontinued operations.
The contract provided for a payment of $80 million by the Company ($50
million of which was subsequently borrowed from the reinsurance company)
and for payment by the Company of the first $73 million of claims. The
Company recorded a $6 million charge in 1994 representing the amount of
the payment that exceeded the recoverable portion of existing reserves.
- In December 1994, the Company resolved certain indemnity obligations
related to the 1987 sale of Sphere Drake Insurance Group ("Sphere
Drake"). The Company provided for a $20.9 million loss from discontinued
operations in the third quarter of 1994 related to this agreement.
Other Contingencies
- In February 1995, the Company settled a 1985 lawsuit by the Pine Top
Insurance Company ending litigation seeking compensatory, punitive and
other damages of over $87 million. The amount of the settlement was not
material and was previously reserved by the Company.
SALES OF NON-CORE BUSINESSES
- In November 1994, the Company completed the sale of its U.S.-based
personal lines business. The total proceeds were $30.2 million and a
pre-tax gain of $20.2 million was reflected in the fourth quarter of
1994 results.
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- In January 1995, the Company completed the sale of its minority interest
in Noble Grossart Holdings Limited, a privately-held U.K. merchant bank,
for proceeds of $7.2 million resulting in a first quarter 1995 pre-tax
gain of approximately $0.3 million.
- In February 1995, the Company completed the sale of Alexsis, Inc., its
U.S.-based third-party administrator operation, for cash proceeds of
approximately $47.1 million. The transaction will result in an
approximate $30 million pre-tax gain in the first quarter of 1995.
These actions were implemented to lay a foundation for improved, sustainable
earnings and to substantially reduce the Company's financial exposure to
litigation and other contingencies.
These actions are more fully discussed in MD&A and Notes to Financial
Statements included in this Prospectus.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
The summary consolidated financial data in the following table for each of
the five years in the period ended December 31, 1994 have been derived from the
audited consolidated financial statements of the Company. The Company's
consolidated balance sheets as of December 31, 1994 and 1993, and the related
consolidated statements of operations, cash flows and stockholders' equity for
each of the three years in the period ended December 31, 1994 (the "Financial
Statements"), and the report of Deloitte & Touche LLP, the Company's independent
auditors, thereon, are included in this Prospectus. The following information
should be read in conjunction with, and is qualified in its entirety by, the
financial statements and other information included in this Prospectus.
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<TABLE><CAPTION>
(DOLLARS IN MILLIONS, EXCEPT PER SHARE
AMOUNTS) 1994 1993 1992 1991 1990
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
OPERATING RESULTS:
Operating Revenues..................... $1,323.9 $1,341.6 $1,369.5 $1,385.1 $1,361.4
Operating Income (Loss) (1)............ (82.9) 52.3 85.5 16.4 123.8
Other Income (Expenses) (2)............ (63.9) (20.4) 17.4 (22.8) (20.5)
Income (Loss) from Continuing
Operations............................... (107.2) 23.6 57.1 (9.5) 55.9
Loss from Discontinued Operations...... (28.9) -- (145.0) -- --
Cumulative Effect of Change in
Accounting (3)........................... (2.6) 3.3 -- (2.2) --
Net Income (Loss)...................... (138.7) 26.9 (87.9) (11.7) 55.9
Earnings (Loss) Atrributable to
Common Shareholders.................. (153.8) 20.7 (87.9) (11.7) 55.9
PER SHARE OF COMMON STOCK:
Income (Loss) from Continuing
Operations............................... $ (2.79) $ .40 $ 1.32 $ (.22) $ 1.30
Loss from Discontinued Operations...... (.66) -- (3.35) -- --
Cumulative Effect of Change in
Accounting............................... (.06) .08 -- (.05) --
-------- -------- -------- -------- --------
Net Income (Loss)...................... $ (3.51) $ .48 $ (2.03) $ (.27) $ 1.30
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
Dividends Paid......................... $ .325 $ 1.00 $ 1.00 $ 1.00 $ 1.00
-------- -------- -------- -------- --------
-------- -------- -------- -------- --------
FINANCIAL POSITION:
Total Assets........................... $2,945.7 $2,793.8 $2,609.6 $2,737.8 $2,812.9
Working Capital........................ 237.6 186.2 191.7 172.6 173.6
Long-term Debt......................... 132.7 111.8 125.1 169.9 182.6
Stockholders' Equity................... 317.5 276.2 185.5 370.1 430.6
OTHER DATA:
Average Common Shares Outstanding
(millions)............................... 43.8 43.4 43.2 43.1 43.0
Cash Dividends Paid (4):
Common Stock......................... $ 14.3 $ 41.7 $ 40.9 $ 40.6 $ 40.7
Series A Preferred................... 8.3 6.2 -- -- --
Number of Employees (thousands)........ 13.3 14.5 14.9 15.8 16.2
</TABLE>
- ------------
(1) Includes restructuring charges of $69 million in 1994, $45.5 million in 1991
and $6.5 million in 1990 (see Note 3 of Notes to Financial Statements
included in this Prospectus).
(2) Includes special charges primarily related to contingency settlements and
other indemnity costs of $69.7 million in 1994, $16.5 million in 1992, $13
million in 1991 and $5.5 million in 1990. Also includes gains on sales of
non-core businesses of $20.2 million in 1994, $3.9 million in 1993 and $43.8
million in 1992 (see Note 3 of Notes to Financial Statements included in
this Prospectus).
(3) Includes the adoption, effective January 1, 1994, of SFAS No. 112
"Employers' Accounting for Postemployment Benefits"; effective January 1,
1993, of SFAS No. 109 "Accounting for Income Taxes" and effective January 1,
1991, of certain provisions of SFAS No. 106 "Employers' Accounting for
Postretirement Benefits Other Than Pensions" relating to deferred
compensation plans (see Notes 5 and 9 of Notes to Financial Statements
included in this Prospectus).
(4) Dividends on the Series B Cumulative Convertible Preferred Shares are
payable in kind (additional Series B preferred shares) until December 15,
1996 and thereafter, at the Board of Directors election, until December 15,
1999.
FISCAL 1994
The Company reported a net loss of $138.7 million or $3.51 per share for
1994. Included in the results were after-tax charges for restructuring,
contingency settlements and other reserves of $106.6 million, or $2.43 per
share; an after-tax gain of $12.5 million or $0.28 per share, from the sale of
the Company's U.S.-based personal lines insurance broking business, and
after-tax charges of $28.9 million or $0.66 per share, relating to certain
indemnity obligations and exposures of the Company's discontinued operations.
11
<PAGE>
At December 31, 1994, the Company's operating cash and cash equivalents
totaled $248.7 million, a $97.2 million increase over the 1993 year-end balance.
In addition, the Company had $83.3 million of operating funds invested in short
and long-term investments at December 31, 1994.
As part of the 1994 review of the Company's overall operating strategy, the
compensation program for the key employees of the Company and its subsidiaries
(including the Company's executive officers) was redesigned. In addition, to
further align the interests of management with those of stockholders, new equity
based programs are being submitted to stockholders for approval at the Company's
Annual Meeting of Stockholders in May 1995. If approved by stockholders at the
annual meeting, up to an additional 5,450,000 shares of Common Stock will be
reserved for issuance under the new programs.
OUTLOOK
While the Company has made substantial progress during 1994 in stabilizing
its operations, rebuilding its balance sheet, and improving its cost structure,
the Company is now focused on the implementation of its cost reductions,
increasing revenue growth and improving its market share and services. The
Company's restructuring and related initiatives in part reflect management's
view that insurance premium pricing will not improve significantly in the
foreseeable future. The Company's insurance broking revenues are generally
affected by premium rates charged by insurance companies in the property and
casualty markets and the overall available market capacity. Since the
mid-to-late 1980s, commission and fee growth has been constrained due to soft
pricing and excess capacity and the resultant intense competition among
insurance carriers and brokers for market share.
Revenue growth from the Company's human resource management consulting
operations was impacted by uncertainty over health care reform in the U.S. Many
clients postponed or reduced planned employee benefit reviews while waiting to
analyze the impact of the potential governmental health care proposals. The
Company anticipates moderate revenue growth in human resource management
consulting during 1995 as corporations recognize that any such proposals are not
likely to affect their efforts to redesign and streamline employee benefit
packages. Revenue growth will depend increasingly on the development of new
products and services and new business generation.
During 1995, the Company will also explore geographical market expansion and
further industry specialization as well as consider possible niche and
substantial strategic acquisitions. As part of its evaluation of opportunities,
the Company engages in discussions with interested parties concerning possible
transactions. The Company has evaluated and is evaluating such opportunities and
prospects and will continue to do so throughout 1995. The Company cannot predict
if any transaction will be consummated, nor the terms or form of consideration
that may be required.
Overall comparable operating expenses are expected to decline in 1995
resulting from the expense reduction initiatives. As discussed above, the
Company has estimated that over $100 million of expense savings will be realized
from these efforts; however, approximately one-half of such savings will be
offset by investments in new technology, products and personnel to support
revenue growth as well as normal inflationary increases.
Included in the Company's first quarter 1995 results will be a $30 million
pre-tax gain from the sale of Alexsis Inc., the Company's U.S.-based third party
administrator and a $0.3 million pre-tax gain from the sale of the Company's
interest in Noble Grossart Limited, a privately held U.K. merchant bank.
12
<PAGE>
THE COMPANY
GENERAL
Alexander & Alexander Services Inc. (the "Company"), is a holding company
which, through its subsidiaries, provides risk management, insurance brokerage
and human resource management consulting services on a global basis. It is one
of the few organizations capable of providing such services to clients with
multinational operations. The Company operates from offices located in more than
80 countries and territories through wholly owned subsidiaries, affiliates and
other servicing capabilities. The Company's extensive international operations
represent 48 percent, 46 percent and 47 percent of the Company's consolidated
operating revenues for the years ended December 31, 1994, 1993 and 1992,
respectively. The Company's clients are primarily commercial enterprises,
including a broad range of industrial, transportation, service, financial and
other businesses. Clients also include government and governmental agencies,
not-for-profit organizations and individuals. The Company was incorporated under
the laws of the State of Maryland in 1973. Through predecessor entities, it has
been in business since 1899.
During 1994, the Board of Directors effected significant changes in the
Company's management. The board's goal was to address the Company's financial
underperformance and to reposition the Company to deal with a changing business
environment. In the last half of 1994, new management conducted a thorough
worldwide review of the Company's operations, expense structure and business
strategy. As a result of this review, new management restructured, to varying
degrees, each of the Company's core businesses while also addressing
longstanding litigation and other contingencies. In addition, the Company
identified approximately $120 million in annualized expense savings, a
substantial portion of which will be reinvested in technology, employment
training and product development.
In the fourth quarter of 1994, management of the Company committed to a
formal plan of restructuring. This plan included the consolidation of real
estate space requirements at 48 offices worldwide and early retirement programs
and workforce reductions involving approximately 1,100 positions. In addition to
the charge for restructuring, the Company recorded during the third and fourth
quarters certain special charges relating to the settlement of longstanding
contingencies and certain increases to the Company's pre-existing reserves.
INDUSTRY SEGMENTS
Insurance Services. The Company's principal industry segment is insurance
services. For the years ended December 31, 1994, 1993 and 1992, total revenues
contributed by the Company's insurance services segment accounted for 84
percent, 84 percent and 82 percent, respectively, of its consolidated operating
revenues. The Company's operations in this segment include risk management and
insurance services, specialist and reinsurance broking. The Company's extensive
services permit it to handle diverse lines of coverage. Risk Management and
Insurance Services.The Company's Risk Management and Insurance Services
operations (also known as "retail broking") develop risk management programs and
places coverage on behalf of its clients directly with insurance companies, or
indirectly through specialist insurance brokers. During 1994, this operation
served approximately 200,000 clients, through 280 offices in 74 countries. For
the years ended December 31, 1994, 1993 and 1992, the Company's risk management
and insurance services operations accounted for approximately 64 percent, 64
percent and 63 percent, respectively, of the Company's consolidated operating
revenues. In 1993, the Company introduced the common trading name of "Alexander
& Alexander" throughout its global insurance services network in the United
States, the United Kingdom, Canada and Japan and in most of its markets in
continental Europe, Asia-Pacific and the Middle East. The Company's risk
analysis and management capabilities include a broad range of services such as
risk surveys and analyses, loss control and cost studies, formulation of safety
procedures and insurance programs. Complementing these services, the Company
offers financial and actuarial risk information, strategic risk management
consulting and administration of captive insurance companies and of runoff
insurance and reinsurance companies and intermediaries. Specialist and
Reinsurance Broking. Effective January 1, 1995, the
13
<PAGE>
Company's specialist broking (also referred to as "wholesale broking") and
reinsurance broking operations were combined under the operating name Alexander
Howden Group Ltd., headquartered in London. This operation has 46 offices
located in 21 countries. For the years ended December 31, 1994, 1993 and 1992,
the Company's combined specialist and reinsurance broking operations accounted
for approximately 20 percent, 20 percent and 19 percent, respectively, of the
Company's consolidated operating revenues. As a specialist broker, the Company
acts as an intermediary between the retail broker and insurance companies and
Lloyd's of London syndicates. The Company's worldwide specialist operations
place large and complex risks that require access to the London and world
markets, offer excess, surplus and specialty lines placements, specialist
insurance broking and facultative reinsurance. As a reinsurance broker, the
Company places coverage on behalf of its insurance or reinsurance company
clients to reinsure all or a portion of the risk underwritten by that insurance
or reinsurance company. The Company's worldwide reinsurance brokerage services,
arrange reinsurance programs for Lloyd's of London syndicates and other
insurance and reinsurance companies worldwide.
The Company is compensated for its broking services by commissions, usually
as a percentage of insurance premiums paid by the client, or by negotiated fees.
The Company may also receive contingent commissions which are based on the
volume and/or profitability of business placed with an insurance company over a
given period of time. The Company is generally compensated on a fee basis when
providing consulting and advisory services with respect to its clients' risk and
underwriting management programs. Premiums received from insureds but not yet
remitted to the carriers and claims payments received from carriers but not yet
remitted to the insureds are held as cash or investments in a fiduciary
capacity.
Human Resource Management Consulting. The Company offers global human
resource management consulting services and benefits broking through the
Alexander Consulting Group Inc. ("ACG"). For the years ended December 31, 1994,
1993 and 1992, total revenues contributed by the Company's human resource
management consulting services segment accounted for 16 percent, 16 percent and
18 percent, respectively, of the Company's consolidated operating revenues. ACG
provides integrated advisory and support services in human resource management,
including retirement planning, health care management, organizational
effectiveness, compensation, human resource-related communications, and
information technologies. ACG also offers brokerage services for group health
and welfare, special risk, and executive planning insurance coverages. During
1994, this operation served over 20,000 clients, through 85 offices in 18
countries.
The Company is compensated for human resource management consulting services
on a fee basis, except in instances where it receives commissions from insurance
companies for the placement of individual and group insurance contracts.
Financial Information about Industry Segments. For financial information
related to the Company's industry segments and geographical concentrations for
each of the three years in the period ended December 31, 1994, see MD&A and Note
15 of the Notes to Financial Statements included in this Prospectus.
DISCONTINUED OPERATIONS
In 1985, the Company discontinued its insurance underwriting operations. In
1987, the Company sold Sphere Drake Insurance Group (Sphere Drake). The Sphere
Drake sales agreement provides indemnities by the Company to the purchaser for
various potential liabilities including provisions covering future losses on
certain insurance pooling arrangements from 1953 to 1967 between Sphere Drake
and Orion Insurance Company (Orion), a U.K.-based insurance company, and future
losses pursuant to a stop-loss reinsurance contract between Sphere Drake and
Lloyd's Syndicate 701. In addition, the sales agreement requires the Company to
assume any losses in respect of actions or
14
<PAGE>
omissions by Swann & Everett Underwriting Agency (Swann & Everett), an
underwriting management company previously managed by a subsidiary of the
Company. In addition, the Company is currently running off its insurance
underwriting subsidiaries located in Atlanta and Bermuda.
For further information concerning discontinued operations see MD&A and Note
6 of Notes to Financial Statements included in this Prospectus.
COMPETITION AND CUSTOMERS
Insurance broking and human resource management consulting are highly
competitive industries. The Company competes with other worldwide and national
companies, as well as regional and local firms. The principal methods of
competition in these businesses involve the nature, quality and cost of the
services the broker or consultant provides. As a service provider, the Company
also encounters competition with respect to attracting and retaining qualified
employees. In addition, insurance and reinsurance underwriters compete with the
Company by marketing and servicing their insurance products without the
assistance of insurance brokers. Also, certain insureds and groups of insureds
have initiated programs of self-insurance, thereby reducing or eliminating the
need for insurance brokers.
EMPLOYEES
At December 31, 1994, the Company had approximately 13,300 employees. As
part of the Company's fourth quarter 1994 restructuring plan, the Company
implemented workforce reductions and early retirement programs involving
approximately 1,100 positions, of which 650 were in the U.S. The workforce
reduction involved the elimination of 898 positions worldwide and early
retirement was accepted by 208 employees. A net reduction of an additional 380
positions took place during the first nine months of 1994. In addition, the
February 1995 sale of Alexsis, Inc. will eliminate approximately 1,300
positions.
A small number of employees in foreign countries are represented by labor
unions. In addition, support personnel in Australia are represented by an
industrywide union. The Company considers relations with its employees to be
satisfactory.
REGULATIONS AND LICENSING
The activities of the Company related to insurance broking and human
resource management consulting services are subject to licensing requirements
and extensive regulation under the laws of the United States and each of its
various states, territories and possessions, as well as the laws of numerous
other countries in which the Company's subsidiaries conduct business. These laws
and regulations vary by jurisdiction. The appropriate regulatory authorities
generally have wide discretionary authority in adopting, amending and
implementing such regulations. In addition, certain of the Company's insurance
activities are governed by the rules of the Lloyd's of London insurance market
and other similar organizations.
In every state of the United States and most foreign jurisdictions, an
insurance broker or agent is required to have a license and such license may be
denied or revoked by the appropriate governmental agency for various reasons,
including the violation of its regulations and the conviction of crimes. In a
few jurisdictions, licenses are issued only to individual residents or locally
owned business entities. In certain of those jurisdictions, if the Company
itself has no subsidiary that is so licensed, the Company may from time to time
make arrangements with residents or business entities licensed to act on its
behalf in the jurisdiction.
The legality of the Company's operations depends on the continuing retention
and validity of the licenses under which it operates and on compliance with a
diverse and complex regulatory structure. The Company's licenses may not be
readily transferable in many jurisdictions. The Company expends
15
<PAGE>
significant amounts of time and money to maintain its licenses and to ensure
compliance with applicable laws and regulations.
Because of its multistate and international operations, in some instances
the Company follows practices which are based upon its interpretation of laws or
regulations or upon the interpretation generally followed by the industry.
However, such interpretations may be in conflict with those of regulatory
authorities. Therefore, the possibility exists that the Company may be precluded
or temporarily suspended from continuing its business or otherwise penalized in
a given jurisdiction.
PROPERTIES
Substantially all of the Company's worldwide facilities are leased. No
difficulty is anticipated in negotiating renewals as leases expire or in finding
other satisfactory space if the premises become unavailable.
As part of the fourth quarter restructuring plan, the Company consolidated
real estate requirements at 48 offices worldwide. The real estate activities
represented the closure, abandonment and downsizing of office space globally,
including 34 locations in the U.S.
For further information concerning the Company's obligations under capital
leases and noncancelable operating leases see Notes 8 and 13 of Notes to
Financial Statements included in this Prospectus.
ACQUISITION OF CLAY & PARTNERS AND RELATED AGREEMENTS
The Selling Stockholders acquired 2,274,410 shares of the Common Stock,
$1.00 par value per share (the "Consideration Shares") of the Company in
connection with the Company's November 30, 1993 acquisition from each of the
Selling Stockholders of his or her respective interests in the assets and
business of Clay & Partners, a U.K. partnership ("Clay"). At the time of the
acquisition, Clay was the third largest U.K. partnership of consulting actuaries
and pension fund administrators, providing employee benefits and related
consulting services to corporate clients, primarily in the United Kingdom.
Through the acquisition of Clay, the Company plans to expand the European
operations of ACG, its human resource management consulting subsidiary.
The Consideration Shares were the total consideration paid for the purchase
of Clay. For the purpose of the transaction, the Consideration Shares were given
a value of $20.00 per share, valued at an exchange rate expressed in dollars per
B.P.1.00 of $1.479.
The acquisition was effected pursuant to a Sale and Purchase Agreement (the
"Purchase Agreement"), dated as of November 30, 1993, among the Company and the
Selling Stockholders. Pursuant to the Purchase Agreement, the parties entered
into certain other agreements, including a Registration Rights Agreement (the
"Registration Rights Agreement"), dated as of November 30, 1993, among the
Company and the Selling Stockholders. The sale and purchase of Clay and the
issuance of the Consideration Shares were consummated on November 30, 1993.
The Shares offered hereunder represent that portion of the Consideration
Shares the Selling Stockholders have elected to sell at the present time
pursuant to this registration.
The following description of the Purchase Agreement and the Registration
Rights Agreement are summaries of certain of the material terms contained
therein and are qualified in their entirety by reference to the full text of
such agreements which have been filed as Exhibits to the Registration Statement
of which the Prospectus is a part.
16
<PAGE>
PURCHASE AGREEMENT
Pursuant to the Purchase Agreement, on the Transfer Date, the Company issued
to each of the Selling Stockholders that portion of the Consideration Shares
allocable to each of the respective Selling Stockholder's interest in Clay.
REGISTRATION RIGHTS AGREEMENT
Under the Registration Rights Agreement, the Company has agreed to register
the Consideration Shares under the Securities Act and to use its best efforts to
register the Consideration Shares on Form S-3 pursuant to Rule 415 under the
Securities Act and to maintain the effectiveness of such registration for 90
days (subject to extension, in the event the Company exercises its rights to
prevent sales of the Shares during a transaction blackout or information
blackout, as such terms are described below). Notwithstanding the foregoing, the
Company has agreed to maintain the effectiveness of such registration statement
for 120 days (subject to extension, in the event the Company exercises its
rights to prevent sales of the Shares during a transaction blackout or
information blackout, as such terms are described below). Consideration Shares
so registered may be sold in "block" sales to institutional investors or through
broker-dealers in privately negotiated transactions with institutional or
corporate investors, through customary brokerage channels or in an underwritten
public offering.
The Registration Rights Agreement contains additional agreements among the
parties, including, among other things, agreements relating to indemnification
and contribution and the Company's agreement to comply with applicable rules in
order to permit resales of the Consideration Shares without registration
pursuant to Rule 144 under the Securities Act. The parties have agreed that
except for the fees and expenses of counsel and other advisors to the Selling
Stockholders, underwriters' fees and expenses, underwriting discounts and
commissions and transfer taxes in respect of the Consideration Shares
registered, which will be borne by the Selling Stockholders, the Company will
pay all other expenses of the registration.
The Selling Stockholders have agreed not to sell any of the Shares after
receipt of notice from the Company that, in its reasonable judgment, it would
not be in the best interests of the Company and its stockholders generally for
such Shares to be sold (for customary reasons, including but not limited to,
such matters as the Company being engaged in active negotiations or planning for
a merger or acquisition or disposition transaction or a private or public
offering of debt securities or having recently completed such an offering) (a
"transaction blackout") or that it is in possession of material non-public
information that, in the reasonable opinion of the Company's counsel, would
expose the Company to securities laws liabilities if Shares continued to be sold
(an "information blackout"). Any information blackout will expire on the date
which is two business days after the information is disclosed. Any transaction
blackout will expire on the date which is two business days after the date the
transaction is abandoned, publicly disclosed or completed (whichever occurs
first). The Company has agreed that, if there is any blackout, it will maintain
the effectiveness of the Registration Statement of which this Prospectus is a
part for an additional period equal to the greater of 15 days and the duration
of such blackout.
COMPENSATORY ARRANGEMENT AND COMPANY LOANS TO CERTAIN SELLING STOCKHOLDERS
In January 1995, in recognition that there had been delays in the
declaration of the effectiveness of this Registration Statement the Company
offered a compensatory arrangement to the Selling Stockholders (the
"Compensatory Arrangement"). Under the Compensatory Arrangement, the Company
agreed to advance monies (the "Loan" or "Loans") to each of the Selling
Stockholders in up to an amount equal to the market value of Shares being
offered by such Selling Stockholder in this Offering (the "Loan Program"). The
Loans were secured by a pledge of shares of the Company's Common Stock
registered to such Selling Stockholder having a market value equal to the amount
of the Loan requested. As to Shares so pledged, each such Selling Stockholder
will have the right to vote and receive
17
<PAGE>
dividends on such Shares. Under the terms of the Loans, which are non-interest
bearing, the entire amount of the unpaid principal balance and any other
payments due thereunder are due and payable on the earlier of November 30, 1995
or the day following a fifteen day period of continuous effectiveness of this
Registration Statement. However, should this Registration Statement fail to have
been continuously effective for a fourteen day period commencing on or prior to
April 5, 1995 (the "First Period"), the Company has agreed to forgive $22,981 of
the principal amount of each of the Loans. In addition, should this Registration
Statement fail to have been continuously effective for a fourteen day period
commencing on or prior to June 30, 1995 (the "Second Period"), an additional
$22,981 of the principal amount of each of the Loans will be forgiven.
Under the Compensatory Arrangement, in the event a Selling Stockholder
elected not to participate in the Loan Program, the Company has agreed to pay
such Selling Stockholder $22,981 should this Registration Statement fail to be
continuously effective during the First Period and an additional $22,981 should
this Registration Statement fail to have been continuously effective during the
Second Period (the "Compensatory Awards").
Should this Registration Statement fail to have been effective during the
First Period, the aggregate cost of the loan forgiveness and the Compensatory
Award would amount to $459,620, and such costs for the Second Period would
amount to $459,620.
In addition, under the Compensatory Arrangement the Company agreed to
reimburse the Selling Stockholders, as a group, $50,000 for legal fees incurred
to date in connection with the registration of the Shares. The Company also
agreed that if the Registration Statement was not effective on or before June
30, 1995 that the Company will consider additional reimbursement of legal fees.
The following table identifies each of the Selling Stockholders
participating in the Loan Program and indicates the amount of each selling
stockholder's indebtedness:
<TABLE><CAPTION>
NAME AMOUNT OF INDEBTEDNESS(1)
- ---------------------------------------------------------------------- -------------------------
<S> <C>
Nigel R. Bankhead..................................................... $ 229,809
Geoffrey Booth........................................................ 212,956
Lynne Davis........................................................... 153,206
Jeremy D. Fisher...................................................... 229,809
Alan S. Fishman....................................................... 229,809
Helen James........................................................... 205,989
Peter L. Lockyer...................................................... 229,809
Stephen M. Riley...................................................... 229,809
Richard C.W. Strattan................................................. 229,809
Nigel Taylor.......................................................... 229,809
Robert S. Thomson..................................................... 229,809
Stephen F. Yeo........................................................ 229,809
</TABLE>
- ------------
(1) Amounts have been restated in U.S. dollars based on the average exchange
rate expressed in dollars per B.P.1.00 of 1.53.
18
<PAGE>
SELLING STOCKHOLDERS
The following table identifies each of the Selling Stockholders and
indicates (i) the nature of any position, office or other material relationship
that each such Selling Stockholder has had within the past three years with the
Company (or any of its predecessors or affiliates) and (ii) the number of shares
of Common Stock owned by each such Selling Stockholder prior to the offering,
the number of shares to be offered for the account of such Selling Stockholder
and the number of shares and percentage of outstanding shares to be owned by
such Selling Stockholder after completion of the offering.
The Purchase Agreement contemplated that Clay would be integrated with the
Company's human resource consulting division in the United Kingdom. The combined
operation was named Alexander Clay & Partners Consulting ("AC&P"). Each of the
Selling Stockholders (other than Simon Stoye) was offered employment with AC&P
and those who were offered employment have accepted such employment.
<TABLE>
<CAPTION>
SHARES AND
SHARES SHARES PERCENTAGE**
OWNED OFFERED OF CLASS
POSITION WITH OR RELATIONSHIP BEFORE THE IN THE OWNED AFTER
NAME TO THE COMPANY OFFERING OFFERING THE OFFERING
- ---------------------------- ----------------------------- ---------- -------- -------------
<S> <C> <C> <C> <C>
Ian S. Aitken............... Principal Consultant--AC&P 87,337 30,000 57,337
Nigel R. Bankhead........... Principal Consultant--AC&P 64,844 21,000 43,844
Geoffrey Booth*............. Principal Consultant--AC&P 109,195 0 109,195
Jonathan R.P. Checkley...... Principal Consultant--AC&P 136,487 0 136,487
Lynne Davis................. Principal Consultant--AC&P 87,337 69,337 18,000
Maurice Dyson............... Director of Pension 136,487 86,487 50,000
Administration/Principal
Consultant--AC&P
Jeremy D. Fisher............ Principal Consultant--AC&P 109,195 98,275 10,920
Alan S. Fishman............. Deputy Chairman--AC&P 187,525 87,525 100,000
Stephen L. Gooch............ Principal Consultant--AC&P 170,626 125,000 45,626
Helen James................. Director of Professional and 109,195 98,275 10,920
Technical
Services/Principal
Consultant--AC&P
Peter R. Lockyer............ Director of Investment 87,337 42,337 45,000
Services/Principal
Consultant--AC&P
Stephen M. Riley............ Business Develoment 109,195 50,000 59,195
Director--AC&P
Thomas M. Ross.............. Executive Director--AC&P 170,626 80,000 90,626
John E. Shepley............. Principal Consultant--AC&P 136,487 100,000 36,487
Simon C. Stoye.............. None 87,337 35,000 52,337
Richard C.W. Strattan....... Principal Consultant--AC&P 136,487 65,000 71,487
Nigel Taylor................ Principal Consultant--AC&P 64,844 34,800 30,044
Robert S. Thomson........... Principal Consultant--AC&P 87,337 43,669 43,668
John P. Woodhouse........... Principal Consultant--AC&P 87,337 40,000 47,337
Stephen F. Yeo.............. Principal Consultant--AC&P 109,195 30,195 79,000
</TABLE>
- ------------
* Mr. Booth transferred all his Consideration Shares to his spouse after
February 25, 1994.
** No Selling Stockholder acquired or, following the sale of his or her Shares,
will own more than 0.50% of the outstanding shares of the Company's Common
Stock.
The Selling Stockholders have filed a Statement on Schedule 13D pursuant to
Regulation 13D under the Exchange Act with respect to their acquisition of the
Consideration Shares. According to such Statement, the Selling Stockholders made
such filing because there may be deemed to have been the formation of a "group"
(as contemplated by Rule 13d-5(b) under the Exchange Act) consisting of the
Selling Stockholders. However, each Selling Stockholder expressly declared that
such Statement may not be construed as an admission that any such "group" has
been formed or that such Selling Stockholder is, for purposes of Section 13(d)
or 13(g) of the Exchange Act, the beneficial owner of any Consideration Shares
owned by other Selling Stockholders.
The Consideration Shares represent approximately 5.1% of the shares of the
Company's Common Stock outstanding as of March 17, 1995. Following the Offering,
assuming all of the Shares are sold, the Consideration Shares held in the
aggregate by the Selling Stockholders (or in the case of Mr. Booth, his spouse)
will represent approximately 2.6% of the shares of the Company's Common Stock
outstanding as of March 17, 1995.
19
<PAGE>
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Stockholders that they intend to
sell either directly or through broker-dealers, acting either as principal or as
agent, or underwriters, all or a portion of the Shares from time to time in one
or more transactions on the New York Stock Exchange ("NYSE"), The International
Stock Exchange of the United Kingdom and the Republic of Ireland, Ltd. (the
"London Stock Exchange"), in block transactions, in privately negotiated
transactions or through customary brokerage channels, in a public offering or in
a combination of any such methods of sale, at prices and at terms prevailing at
the time of sale or at prices related to the then current market price, or at
negotiated prices. The Selling Stockholders may effect transactions by selling
the Shares to or through broker-dealers acting either as principal or as agent,
and such broker-dealers may receive compensation in the form of usual and
customary or specifically negotiated underwriting discounts, concessions or
commissions from the Selling Stockholders. Such broker-dealers, as agent or
principal, may sell or resell the Shares on the Exchanges at market prices
prevailing at the time of such sales or otherwise. The Company's Common Stock is
listed on the NYSE (symbol: AAL) and the London Stock Exchange (symbol: ALXA).
On April 4, 1995, the last reported sale price of the Company's Common Stock on
the NYSE was $23.625. Pursuant to the Registration Rights Agreement, the shares
registered pursuant to a Registration Statement may be sold by the Selling
Stockholders in the manner selected by the Selling Stockholders in their sole
discretion.
The aggregate proceeds to the Selling Stockholders from the sale of the
Shares so offered will be the purchase price of the Shares sold less the
aggregate agents' commissions and underwriters' discounts, if any, and other
expenses of issuance and distribution not borne by the Company. The Company will
not receive any of the proceeds from the sale by the Selling Stockholders of the
Shares offered hereby. Any broker-dealers that participate with the Selling
Stockholders in the distribution of Shares may be deemed to be underwriters, and
any commissions received by them and any profit on the resale of the Shares
purchased by them might be deemed to be underwriting discounts and commissions
under the Securities Act.
Sales to institutional investors in privately negotiated transactions may be
at market prices prevailing at the time of sales, at prices related to such
prevailing prices or at negotiated prices. Institutional investors who may
acquire Shares from the Selling Stockholders, or, if applicable, a broker-dealer
or underwriter acting for the Selling Stockholders, include commercial and
savings banks, pension funds, investment companies, educational and charitable
institutions and other institutional investors.
If Shares are sold in an underwritten offering, the Shares may be acquired
by the underwriters for their own account and may be further resold from time to
time in one or more transactions, including negotiated transactions, at a fixed
public offering price or at varying prices determined at the time of sale. The
names of the underwriters with respect to any such offering and the terms of the
transactions, including any underwriting discounts, concessions or commissions
and other items constituting compensation of the underwriters and
broker-dealers, if any, will be set forth in a Prospectus Supplement relating to
such offering. Any public offering price and any discounts, concessions or
commissions allowed or reallowed or paid to broker-dealers may be changed from
time to time. Unless otherwise set forth in a Prospectus Supplement, the
obligations of the underwriters to purchase the Shares will be subject to
certain conditions precedent and the underwriters will be obligated to purchase
all of the Shares specified in such Prospectus Supplement if any are purchased.
The Registration Rights Agreement provides that, in certain circumstances,
the Company will indemnify the Selling Stockholders and certain other persons,
including any person who participates as an underwriter (and its controlling
persons) in the offering or sale of the Shares against certain liabilities,
including civil liabilities under the Securities Act. In addition, the
Registration Rights Agreement provides that to the extent such indemnification
is not available in such circumstances, the
20
<PAGE>
Company will under certain circumstances, contribute to payments any such
Selling Stockholder, underwriter or other person may be required to make in
respect of such liabilities.
See "Acquisition of Clay & Partners and Related Agreements-Registration
Rights Agreement" for a further description of certain terms of the Registration
Rights Agreement.
The Selling Stockholders (other than Messrs. Booth and Checkley) have
engaged CS First Boston Corporation ("CS First Boston") to provide advice
concerning the appropriate method of selling the Shares. In that regard, CS
First Boston has indicated that it may, on terms and conditions to be
negotiated, further act on behalf of the Selling Stockholders in connection with
a placement of the Shares in a block transaction, act as a broker-dealer in
selling Shares through customary brokerage channels and/or act as an underwriter
in a public offering of the Shares. CS First Boston has in the past provided,
and continues to provide, investment banking services to the Company.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the Shares by the
Selling Stockholders. All the proceeds will be received by the Selling
Stockholders.
LEGAL MATTERS
The legality of the Shares is being passed upon by Albert A. Skwiertz, Jr.,
Esq., Vice President and General Counsel of the Company. Mr. Skwiertz owns no
shares directly or indirectly of the Company's Common Stock, but holds options
for 28,500 shares of Common Stock. In addition, 1,342 shares of Common Stock are
attributed to Mr. Skwiertz's account under the Company's Thrift Plan.
EXPERTS
The consolidated financial statements and the related financial statement
schedule appearing in this Registration Statement have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their report appearing herein,
and are included in reliance upon the report of such firm given upon their
authority as experts in accounting and auditing.
21
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth the costs and expenses in connection with the
distribution of the shares being registered, other than any underwriting
discounts and commissions. All of the amounts shown, except the Securities and
Exchange Commission registration fees and stock exchange filing fees, are
estimates. Except as provided in the Compensatory Arrangement and except for the
fees and disbursements of counsel and other advisors to the Selling
Stockholders, any underwriters' fees and expenses and underwriting discounts and
commissions and transfer taxes in respect of the Shares being sold, which will
be borne by the Selling Stockholders, the Company has agreed to pay all other
expenses related to this registration.
<TABLE>
<CAPTION>
TO BE PAID BY
REGISTRANT
-------------
<S> <C>
SEC registration fee................................................... $ 7,694
NYSE filing fee........................................................ 7,960
London Stock Exchange filing fee....................................... 9,995
Blue Sky fees and expenses............................................. 1,000
Accounting fees and expenses of the Company's auditors................. 30,000
Printing expenses...................................................... 40,000
Legal fees and expenses of the Company's counsel....................... 25,000
Legal fees of the Selling Shareholders Counsel paid by the Company..... 50,000
Miscellaneous expenses................................................. 2,000
-------------
Total............................................................ $ 173,649
-------------
-------------
</TABLE>
Any other expenses in connection with the Shares being registered will be
borne by the Selling Stockholders.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 2-418 of the Maryland General Corporation Law establishes provisions
whereby a Maryland corporation may indemnify any director or officer, made party
to an action or proceeding by reason of service in that capacity, against
judgments, penalties, fines, settlements and reasonable expenses incurred in
connection with such action or proceeding unless it is proved that the director
or officer (i) acted in bad faith or with active and deliberate dishonesty, (ii)
actually received an improper personal benefit in money, property or services or
(iii) in the case of a criminal proceeding had reasonable cause to believe that
his act was unlawful. However, if the proceeding is a derivative suit in favor
of the corporation, indemnification may not be made if the individual is
adjudged to be liable to the corporation. In no case may indemnification be made
until a determination has been reached that the director or officer has met the
applicable standard of conduct. Indemnification for reasonable expenses is
mandatory if the director or officer has been successful on the merits or
otherwise in the defense of any action or proceeding covered by the
indemnification statute. The statute also provides for indemnification of
directors and officers by court order. The indemnification provided or
authorized in the indemnification statute does not preclude a corporation from
extending other rights (indemnification or otherwise) to directors and officers.
The Company's Bylaws provide for indemnification of any person who is
serving or has served as a director or officer of the Company, against all
liabilities and expenses incurred in connection with any action, suit or
proceeding arising out of such service to the full extent permitted under
Maryland law.
The Company currently maintains policies of insurance under which the
Company and the directors and officers of the Company are insured, within the
limits of the policies, against certain
II-1
<PAGE>
expenses in connection with the defense of actions, suits or proceedings, and
certain liabilities which might be imposed as a result of such actions, suits or
proceedings, to which directors and officers of the Company are parties by
reason of being or having been such directors or officers.
EXHIBITS*
The following exhibits are filed with this Registration Statement:
<TABLE><CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
- ------- ---------------------------------------------------------------------------------
<C> <S>
**5.1 Opinion of Counsel of Albert A Skwiertz, Jr, Esq., Vice President and General
Counsel of the Company
10.1 Purchase Agreement, dated November 30, 1993, among the Company and the Selling
Stockholders (including certain parts of the Schedule thereto)
10.2 Registration Rights Agreement, dated November 30, 1993, among the Company and the
Selling Stockholders
10.3 Letter Agreement, dated June 28, 1994, between CS First Boston Corporation, the
Selling Stockholders (other than Messrs. Booth and Checkley) and the Company
respecting the offering and sale of the Shares.
**10.4 Form of Compensatory Arrangement and Form of Company Loan to certain Selling
Stockholders: (i) Form of Offer of Compensatory Arrangement; (ii) Form of
Memorandum of Deposit and Charge Over Securities; (iii) Form of Loan Request and
Undertaking; (iv) Form of Loan Request for those Selling Stockholders splitting
their stock certificates in respect of shares deposited as security and those
shares remaining; and (v) Form of Promissory Note.
**23.1 Independent Auditors' Consent
**23.2 Consent of Albert A. Skwiertz, Jr, Esq., Vice President and General Counsel of
the Company, included in Exhibit 5.1
**23.3 Consent of Steptoe & Johnson
24.1 Power of Attorney is included in the Signature Page contained in Part II of the
Registration Statement, dated August 16, 1994
24.2 Power of Attorney of Richard P. Sneeder, Jr.
</TABLE>
- ------------
* Except as noted, all exhibits are previously filed.
** Filed herewith.
UNDERTAKINGS
The undersigned Registrant undertakes: (1) To file, during any period in
which offers or sales are being made, a post-effective amendment to this
Registration Statement: (i) To include any prospectus required by section
10(a)(3) of the Securities Act; (ii) To reflect in the prospectus any facts or
events arising after the effective date of the Registration Statement (or the
most recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
Registration Statement; (iii) To include any material information with respect
to the plan of distribution not previously disclosed in the Registration
Statement; provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if
the information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated in the
Registration Statement. (2) That, for the purpose of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof. (3) To remove from registration by means of a
post-effective amendment any of the Shares being registered which remain unsold
at the termination of the offering.
II-2
<PAGE>
The undersigned Registrant hereby further undertakes that for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act (and, where applicable, each filing of an employee benefit plan's
annual report pursuant to Section 15(d) of the Exchange Act) that is
incorporated by reference in the Registration Statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit, or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the questions whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby further undertakes that: (1) for the
purposes of determining any liability under the Securities Act, the information
omitted from the form of Prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in a form of Prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
shall be deemed to be part of the Registration Statement as of the time it was
declared effective. (2) for the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of Prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment No. 3 to
the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on the
5th day of April, 1995.
ALEXANDER & ALEXANDER SERVICES INC.
By: /s/ FRANK G. ZARB
..................................
Frank G. Zarb
Chairman of the Board, Chief
Executive Officer,
President and Director
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 3 to the Registration Statement has been signed on April 5, 1995 by the
following persons in the capacities indicated.
<TABLE><CAPTION>
NAME TITLE
---------------------------------------- ---------------------------------------------
<S> <C>
/s/ FRANK G. ZARB Chairman of the Board, Chief Executive
........................................ Officer, President and Director
Frank G. Zarb
/s/ EDWARD F. KOSNIK Executive Vice President and Chief Financial
........................................ Officer and Director
Edward F. Kosnik
/s/ RICHARD P. SNEEDER, JR. Controller
........................................
Richard P. Sneeder, Jr.
By Power of Attorney
/s/ KENNETH BLACK, JR. Director
........................................
Kenneth Black, Jr.
By Power of Attorney
/s/ JOHN A. BOGARDUS, JR. Director
........................................
John A. Bogardus, Jr.
By Power of Attorney
/s/ ROBERT E. BONI Director
........................................
Robert E. Boni
Director
........................................
W. Peter Cooke
</TABLE>
II-4
<PAGE>
NAME TITLE
---- -----
Director
........................................
E. Gerald Corrigan
Director
........................................
Joseph L. Dionne
Director
........................................
Gerald R. Ford
/s/ PETER C. GODSOE Director
........................................
Peter C. Godsoe
By Power of Attorney
/s/ ANGUS M.M. GROSSART Director
........................................
Angus M.M. Grossart
By Power of Attorney
Director
........................................
Maurice H. Hartigan
Director
........................................
James Bickford Hurlock
Director
........................................
Ronald A. Iles
/s/ VINCENT R. MCLEAN Director
........................................
Vincent R. McLean
By Power of Attorney
Director
........................................
James D. Robinson III
/s/ WILLIAM M. WILSON Director
........................................
William M. Wilson
By Power of Attorney
II-5
<PAGE>
NAME TITLE
---- -----
/s/ FRANK G. ZARB Attorney-in-Fact for
........................................ the Signing Officers
Frank G. Zarb and Directors
/s/ ROBERT E. BONI Attorney-in-Fact for
........................................ the Signing Officers
Robert E. Boni and Directors
II-6
<PAGE>
EXHIBIT INDEX
<TABLE><CAPTION>
EXHIBIT* PAGE
NUMBER EXHIBIT TITLE NO.
- ------- ------------------------------------------------------------------------ --------
<C> <S> <C>
**5.1 Opinion of Counsel of Albert A Skwiertz, Jr, Esq., Vice President and
General Counsel of the Company..........................................
10.1 Purchase Agreement, dated November 30, 1993, among the Company and the
Selling Stockholders (including certain parts of the Schedule
thereto)................................................................
10.2 Registration Rights Agreement, dated November 30, 1993, among the
Company and the Selling Stockholders....................................
10.3 Letter Agreement, dated June 28, 1994, between CS First Boston
Corporation, the Selling Stockholders (other than Messrs. Booth and
Checkley) and the Company respecting the offering and sale of the
Shares..................................................................
10.4 Form of Compensatory Arrangement and Form of Company Loan to certain
Selling Stockholders: (i) Form of Offer of Compensatory Arrangement;
(ii) Form of Memorandum of Deposit and Charge Over Securities; (iii)
Form of Loan Request and Undertaking; (iv) Form of Loan Request for
those Selling Stockholders splitting their stock certificates in respect
of shares deposited as security and those shares remaining; and (v) Form
of Promissory Note......................................................
**23.1 Independent Auditors' Consent...........................................
**23.2 Consent of Albert A. Skwiertz, Jr, Esq., Vice President and General
Counsel of the Company, included in Exhibit 5.1.........................
**23.3 Consent of Steptoe & Johnson............................................
24.1 Power of Attorney is included in the Signature Page contained in Part II
of the Registration Statement, dated August 16, 1994....................
24.2 Power of Attorney of Richard P. Sneeder Jr..............................
</TABLE>
- ------------
* Except as noted, all exhibits are previously filed.
** Filed herewith.
[Logo] EXHIBIT 5.1
ALEXANDER & ALEXANDER
SERVICES INC.
1185 Avenue of the
Americas
New York, N.Y. 10036
Telephone 212 840-8500
FAX 212 444-4696
April 5, 1995
Board of Directors
Alexander & Alexander Services Inc.
1185 Avenue of the Americas
New York, NY 10036
Re: ALEXANDER & ALEXANDER SERVICES INC.
Registration Statement on Form S-3
----------------------------------
Gentlemen:
I am General Counsel of Alexander & Alexander Services Inc., a Maryland
corporation (the "Company"), and have acted as counsel for the Company in
connection with the Registration Statement on Form S-3 (the "Registration
Statement") filed as of August 16, 1994 under the Securities Act of 1933, as
amended, in connection with the proposed offering and sale, from time to time,
of up to 1,136,900 shares of the Company's Common Stock, $1.00 par value per
share (the "Shares"), by certain selling stockholders who are identified in the
Registration Statement.
In connection with the foregoing, I have examined the originals or copies of
such corporate records, documents, certificates and other instruments as I have
deemed necessary or appropriate for the purposes of rendering this opinion.
Based on the foregoing, it is my opinion that the Shares are legally issued,
fully paid and non-assessable.
The foregoing opinions are limited to the laws of the state of Maryland and
I do not express any opinion herein concerning any other law. I hereby consent
to the filing of this opinion as an exhibit to the Registration Statement. In
giving this consent, I do not thereby admit that I am within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933.
Very truly yours,
/s/ Albert A. Skwiertz, Jr.
.................................
Albert A. Skwiertz, Jr.
Vice President and General Counsel
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Amendment No. 3 to
Registration Statement No. 33-55081 of Alexander & Alexander Services Inc. on
Form S-3 of our report dated February 15, 1995 (February 28, March 16 and 27,
1995 with respect to certain information in Notes 2, 5, 8 and 14), appearing in
the Form 10-K/A of Alexander & Alexander Services Inc. for the year ended
December 31, 1994, and to the reference to us under the heading "Experts" in the
Prospectus, which is part of such Registration Statement.
DELOITTE & TOUCHE LLP
Baltimore, Maryland
April 5, 1995
EXHIBIT 23.3
(STEPTOE & JOHNSON LETTERHEAD)
April 5, 1995
Alexander & Alexander Services Inc.
1185 Avenue of the Americas
New York, NY 10036
Ladies and Gentlemen:
We hereby consent to the reference to our Firm under the heading "Risk
Factors" in the Company's Form S-3 Registration Statement, file number 33-55081.
Very truly yours,
/s/ Steptoe & Johnson
.......................
Steptoe & Johnson
